Reasons to Contribute to your 401(k): Week 3 of 4

We are now on week 3 of our 4-week discussion. Last week we discussed how automatic payroll deduction makes it easy to save with your 401(k). This week we will discuss yet another reason why contributing to your plan is a great decision!

Reason number 3: Tax Breaks – Contributing to your 401(k) plan can reduce your taxable income. The IRS allows you to put a maximum of $16,500 every year into a 401(k) plan (this number remains unchanged from 2009 to 2010). By contributing to your 401(k), you may be able to push yourself into a lower tax bracket, where you pay a lower tax rate. Note that if you take money out of your plan before you reach age 59 1/2, you may have to pay a penalty tax in addition to income tax on the money and profits. Continue reading “Reasons to Contribute to your 401(k): Week 3 of 4”

Reasons to Contribute to your 401(k): Week 2 of 4

Last week we discussed how your company can help your investment grow. This week we will also discuss another great reason to contribute to your 401(k).

Reason number 2: Automatic Payroll Deduction – Automatic payroll deduction makes it easy to save with your 401(k) because you figure how much money you want to contribute to your plan and it is automatically deducted from your paycheck each pay period. Since you never see the money, you are not tempted to spend it! Continue reading “Reasons to Contribute to your 401(k): Week 2 of 4”